Business Ethics – Why Are They Important in Small Business?

Rarely is there the individual who does not encounter an ethical or moral dilemma at some point in his or her business life. Whether that individual is the owner of a multinational corporation, a small business entrepreneur, or a new or established employee, everyone is likely to have to face such an instance eventually. Much like a personal ethical dilemma, an individual is faced with making a decision based on how it will affect not only himself, but on how it will effect the organization as a whole. One of the major problems when dealing with an ethical dilemma in business is that individuals are often swayed by business profits and the legality of a decision.

The Institute of Business Ethics, whose slogan is “doing business ethically makes for better business”, describes the term business ethics as such.

Business ethics is the application of ethical values to business behaviour. It applies to any and all aspects of business conduct, from boardroom strategies and how companies treat their suppliers to sales techniques and accounting practices. Ethics goes beyond the legal requirements for a company and is, therefore, discretionary. Business ethics applies to the conduct of individuals and to the conduct of the organisation as a whole. It is about how a company does its business, how it behaves intrinsically.

As clear as this definition is, it is certainly open to interpretation. Therefore it must be understood that the application of business ethics to any situation is entirely subjective.

One can also understand business ethics, and ethics of any kind, as applying a sense of fairness to a situation. Even with a sense of clarity applied to the use of business ethics, reaching a just and moral decision can be a complex process for most individuals. The subject of business ethics has been a source of great debate in recent years as the heads of major (and minor) corporations are revealed as less than ethical characters both in the way they do business and in their personal conduct. However, it may be said that any individual who does not practice business ethics cannot be personally ethical even though the reverse may not also be true. Ethics in generally has a long history of applications. Centuries ago a man’s ethical practices defined who he was as an individual. However, as populations grew, the necessity for incorporating the best business practices into a company became somehow less important because there was always another customer around the corner and the owner of a business was rarely the focus of attention in a community the way he or she may have been in the past. A company’s administration took a seat in the background and hired representatives to deal with any fallout. Ethics rely on several factors, one of the most important of which is culture. Again, like the business person of the past, a culture’s ethics practices will largely depend upon the value that is placed on them. Business ethics have the unappealing conflict of often being contrary to what is legal. Often what is “right” is not necessarily what is legal, and a business must consider this conflict when making ethical judgments. Although there are many in the business world who believe that a business has no room for ethics if it is to function competitively, the numbers of corporate whistleblowers indicate that there is still room for ethics in business.

Western societies place a great deal of emphasis on success. However, in business, there are often conflicts between ethical behavior and business success. This disparity is often multiplied for the small business owner. To compete with larger businesses, it may be tempting to abandon ethics just to make an adequate profit. Additionally, the small business person is relatively autonomous in his or her decision making; he or she does not have to answer to a large employee base or a corporate governing board. It is also interesting to note that the small business leader often has his or her decisions impact a greater number of individuals than does the employee of the small business. For instance, a small business owner may have his or her decision affect his or her customer base as well as his or her employee base. The employee will likely find that his or her decision will only directly impact his or her immediate circle of coworkers. However, the pressure to succeed is both an internal and an external pressure and often leads individuals to make ethical decisions that are based more on those pressures than their own moral judgment. As consumers grow wary of those that they do business with, one must understand that there is just cause for such wariness. The cynical American consumer has learned, often the hard way, that there is little room in business for ethics. In a society where the customer used to be king, the consumer has more often than not experienced several distasteful experiences with business both large and small.

Some experts argue that any focus on profitability is bound to test the limits of ethical practices. They assert that to assume that the primary function of a business is to serve its client base in an ethical manner is idealistic and that the nature of a free economy dictates that ethics must take a back seat to increasing profits. Although it is rarely the conscious intent of a business to harm the public interest, reality dictates that the businesses ability to increase profits will determine its success. Publicly owned companies experience extra pressure in this arena. It is difficult to draw investors to a company based on its ethics. Investors are looking for a return on their investment and ethical performance does not equal dollars. There are economists that assert that, in any competitive economy, ethics are impossible to uphold; that a company can legitimately bypass ethics with the excuse that unethical practices are the only way to make a profit.

Unlike the larger corporations, the small business leader is in a unique position to shape the ethical practices of his or her business. Small businesses have a smaller employee base to police when applying ethical policies than do larger businesses. It is important to understand that, similar to the ethical dilemmas of the large corporations, although an individual surely knows the difference between the correct ethical decision and the wrong road, the choice to throw ethics to the wind is often made because the unethical choice is more profitable. This may, however, happen much less often in smaller organizations because the individual or individuals who are harmed by the unethical decision and someone is always harmed, is more visible to the small business. Major corporations and their decision making machines are often far removed from the individuals that their immoral and/or unethical decisions effect. This may make the wrong decision much easier to make.

The unique position that the small business owner is in regarding the formation of an ethics policy yields a great responsibility. A proactive business leader formulates a statement of organizational values that employees of the company are expected to embrace – at least while performing duties in the service of the company. An organizational ethics policy is an announcement to the employees, the customer base and the community as a whole that the business is prepared to conduct itself and its practices on an ethical level. Such statements invite the respect of all parties involved in doing business with such an entity. However, it is imperative that the small business owner not make the same mistake that larger organizations often do; the ethical policies that a business develops must not be in conflict with the organizational goals. It is unethical in itself to develop an ethical policy that an employee cannot possibly follow and maintain his or her employment. When faced with the decision between an ethical decision and his or her job, an employee will almost always choose the job.

Therefore the policy must be in reasonable alignment with the organizational goals of the business. It is equally important, and maybe more so, that the small business leader lead by example. Employees, especially in a smaller organization, are less likely to conduct themselves ethically if they receive implicit permission not to. The end result of such a practice is that the small business owner can be assured that he or she is conducting business in a manner that encourages the trust of his or her customers as well as his or her employees. And since consumers have become very wary of doing business with an entity they feel they cannot trust, the small business can enjoy the profits of a loyal customer base. The small business owner has an advantage over the larger corporations in that it can elicit the trust of the consumer by applying ethical business practices that give the customer the feel of an equal business relationship rather than one where the consumer buys based on need alone. There are many that believe that such practices are capable of drawing business away from the large corporate entities and back into a customer-focused business format.

Rebecca J. Stigall is a full-time freelance writer, author, and editor with a background in psychology, education, and sales. She has written extensively in the areas of self-help, relationships, psychology, health, busines

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Entrepreneurial Traits – 20 to Think About

Introduction – Entrepreneurial Traits

“If you are not centre stage of your own opportunity, then you are probably just a bit player in someone else’s PB

The word ‘entrepreneur’ is derived from the Old French word ‘entreprendre’ which was first used by the economic ‘theorist’ Richard Cantillon in 1755 in an essay where he used this term to describe a person who assumed the risk of buying goods in the belief that they could sell them at a higher price at a later time. So, the term in French was used to describe ‘one who undertakes’ this particular risk.

Strictly speaking, the natural English equivalent of this description would be an ‘Undertaker’. However, since that particular role in English society preceded the role of the person described above, the English language thought it prudent to borrow the French term to describe this new and rather different undertaking.

Anthropology, social science, economic and management academics continue to argue about the definition of the term because the role of entrepreneur is so multi-faceted and it incorporates so many disciplines with researchers from psychologists, sociologists, historians, finance experts, organizational scholars and the like adding their influences to the debate.

Whilst researchers debate the definition of the term, the rest of us, if asked, could easily identify an entrepreneur and would probably include at least one of the following: Bill Gates, Anita Roddick, Larry Page, Sergey Brin, Donald Trump, Richard Branson, Oprah Winfrey or even the Australian Dick Smith. Journalists have also been quick to place that tag on many of the colourful corporate high flyers who have made incredible wealth in the world of business, many at the expense of others and sometimes, if not outside their country’s governing laws, then quite possibly outside their moral ones. I believe that entrepreneurs and these business people are two different species who operate in the same sphere, but do so with a completely different mindset.

“Not all businessmen go down the drain because I have met quite a few coming up the other way” PB

Entrepreneurial Traits and Mindset

Either way, I think that the tag entrepreneur is of a lesser relevance in the 21st century to the one of being entrepreneurial, because the latter describes a mindset that is actually a prerequisite to performing the role of entrepreneur. Being entrepreneurial does not mean that you always choose the entrepreneurial outlook but rather, that you make decisions in your life with an entrepreneurial bias. Because, like the Chinese philosophy of duality (ying-yang), I believe that life is not so much an either/or proposition but rather a blended, complimentary combination of the two opposing influences.

So, whilst I acknowledge that adopting the attitude at either end of these issues listed below may at times be appropriate – an entrepreneurial bias in decision making will choose, whenever possible, the former rather than the latter in this ‘ying-yang’ list of options:

Longing to Pioneer Vs Administer
A drive to be Creative Vs Conform
Seeing failure as a Setback Vs a Defeat
Valuing Experiences Vs physical Assets
To seek a life of Significance Vs Compliance
Delivering Excellence Vs just the Requirements
Being at peace with an Open Vs a Distinct future
Exercising an Opportunistic Vs Minimalist mindset
Exercising Initiative Vs being Reactive in your actions
Look for the Big picture Vs a Detailed understanding
Seeking to Learn from Vs actively Avoiding the possibility of failure
To choose a position of Leadership Vs Non-involvement
Being Wholehearted Vs Reserved in your commitment
Disciplined by an Internal Drive Vs External Control
Being Accountable Vs Non-committal for outcomes
Doing it the Right way Vs Doing it the Easiest way
To choose a Long term Vs a Short Term outlook
Always Investing Vs Conserving your energy
Seeing success as a Lifestyle Vs Milestone
Looking to Solve Vs Identify problems
To seek out Challenges Vs Sanctuary
A need for Achievement Vs Status
Summary – Entrepreneurial Traits

Maybe the term entrepreneur should rightly just belong to highly innovative and wealthy global identities like those listed above, but all of us should be acknowledged for being entrepreneurial when ever our outlook, choices and positioning matches the first in the options list above. The way I see it, the more entrepreneurial you can be the greater your chances will be of firstly identifying your opportunity and secondly actually having the skills to exploit it when fate delivers it to your door. Who knows, maybe by choosing to be more entrepreneurial from today we may one day also add our name to the great entrepreneurs listed above.

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